Sector movers: HBOS drags banks lower
HBOS signed off the banks' reporting season yesterday and it could not be said to have been an upbeat finale, with the share price heading south at a rate of knots yesterday and continuing south today after the mortgage lender said full year results will be hit by a £180m write-down.
The Halifax owner said the write-down, which represents 3.5p underlying earnings per share, reflects the fall in values of investment securities generally, although it stressed there is no US sub-prime content within its trading book.
The company said it expects to meet market expectations for full year underlying earnings per share of 106.0p.
HBOS said it has reduced its exposure to US sub-prime investments to £430m from £550m at the end of August, which leaves it with total exposure of less than 0.1% of the group balance sheet.
It added that gross mortgage lending has been stronger in the second half of the year, which is expected to lead to an estimated net lending market share in the second half of between 17 and 18%.
Collins Stewart reacted to HBOS's trading update by reiterating its 'sell' rating on the stock and maintaining a price target of 680p.
The broker described the headline results as creditable, adding that the underlying performance slightly exceeded expectations. However, Collins Stewart said the stock did not appear good value just now, given the mixed underlying trends.
Shares in Mondi, which dominates the Forestry & Paper sector, rose Friday after Citigroup said its exposure to emerging markets would help fuel the paper and packaging company's growth.
The broker maintained its 'buy' recommendation and 593p price target on Mondi, saying it could grow by around 20% a year over the next two years.
It said the company would continue raising prices in 2008/09, while enjoying lower cost structures and wood costs in emerging markets.
"Further restructuring as well as growth from new ventures should support profit growth later in the decade," Citigroup added.
Top performing sectors so far today
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Automobiles & Parts 4,686.80 +4.12%
Forestry & Paper 4,405.50 +3.81%
Electronic & Electrical Equipment 1,775.10 +2.56%
General Industrials 2,630.00 +1.71%
Oil Equipment Services & Distribution 14,346.60 +1.64%
Bottom performing sectors so far today
Mining 23,341.20 -2.11%
Banks 8,847.10 -0.30%
Life Insurance 5,385.50 -0.21%
Pharmaceuticals & Biotechnology 8,162.30 -0.05%
Household Goods 7,095.30 -0.02%
